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Reducing Total Cost of Ownership with Standards

There are at least six valid reasons manufacturers should implement standards that outweigh the costs of creating them.

In my years of involvement in the automation industry it is surprising to me how rare it is to see standards implemented on the manufacturing floor. I am referring specifically to hardware and software standards that relate to control system platforms, manufacturing intelligence and networking.

The primary reason given to me by manufacturers for not standardizing is that it gives them the ability to leverage vendors against one another to ensure they are getting the best pricing. I contest that any incremental savings they see by doing this are far outweighed by the increased total cost of ownership they incur by not standardizing.

I also hear of manufacturers being forced to accept non-standard hardware and software due to limitations imposed by original equipment manufacturers (OEMs) that do not offer hardware and software options. They are essentially being forced to adopt the OEMs’ standards. While there is a place and justification for this in certain circumstances, specifically where the functionality of the system can only be achieved with certain hardware and software, they are few and far between.

Manufacturers greatly increase their pool of support resources by standardizing, which of course broadens the competitive landscape for those services.

Understanding that the two reasons above represent cost savings, there are several benefits that far outweigh the additional upfront cost of standardization when you look at things from a total cost of ownership perspective:

1. Reduced spare parts inventory. By standardizing on a hardware platform there are fewer critical spares to maintain. This not only decreases the operating expenses required to purchase the spares, it minimizes the allocation of warehouse space and reduces the time spent and errors made in finding those critical spares.

2. Reduced annual support licenses. This applies primarily to software packages, as most software suppliers will require a license in order maintain access to upgrades. This additional cost alone likely eats up any cost savings recognized by leveraging vendors against one another.

3. More effective engineering and maintenance personnel. Maintaining the skills required to maintain and troubleshoot control and information systems is a significant, ongoing investment. Overburdening maintenance resources by requiring them to maintain knowledge on multiple systems will generally lead directly to increased downtime. If and when a system goes down that has been off the radar for a period of time, that system’s issues simply cannot be addressed with the same certainty as ones that receive more frequent attention.

4. Reduced on-boarding time of engineering and maintenance personnel. Getting personnel up to speed on systems represents a significant investment and the faster they are on-boarded, the sooner manufacturers reap the benefits of having them on staff. With each additional platform they are required to learn the investment and on-boarding time increases significantly.

5. Efficient access to data. While most hardware will support the more common network standards and protocols, each can potentially access that data a bit differently, often requiring unique programming techniques and hardware. This can further exacerbate the hardware, software, licensing and training issues mentioned above.

6. More comprehensive third-party support. Identifying qualified third-party resources to support or upgrade systems becomes more challenging as the number of varying systems they are expected to maintain expertise in increases. Manufacturers greatly increase their pool of support resources by standardizing, which of course broadens the competitive landscape for those services.

As you can see, the benefits of standardizing are many and significant. If you are a manufacturer and are not standardizing, I would strongly encourage you to do so. If you are a supplier to the manufacturing sector, I would encourage you to carry these points with you to counter any manufacturer not considering standardization.

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